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AT&T’s DirecTV ‘Data Free TV’ Wireless Program Is Not Discriminatory, Telco Insists in FCC Response

AT&T’s top government-affairs exec said the telco’s sponsored-data policies are “pro-consumer” — and argued that the company’s exemption of data-usage charges for DirecTV video apps for AT&T wireless customers does not put competitors at a disadvantage.

Robert Quinn, AT&T’s senior VP ‎of external and legislative affairs, outlined the company’s position in a formal response sent Monday to Jon Wilkins, chief of the FCC’s Wireless Telecommunications Bureau. In a letter earlier this month, Wilkins said the agency had “serious concerns” about the DirecTV zero-rating practices and the telco’s sponsored-data program, saying they “may obstruct competition and harm consumers by constraining their ability to access existing and future mobile video services not affiliated with AT&T.”

At issue: AT&T’s “Data Free TV,” which rolled out in September. Under the program, customers with both AT&T wireless and DirecTV can stream an unlimited amount of video through the satellite operator’s app without counting toward their monthly data-usage bucket. (U-verse subs who also have AT&T wireless get the same perk.) The telco also plans to provide that “zero-rating” benefit to customers who have both the DirecTV Now broadband-delivered bundle, priced at $35 per month for 100-plus channels, and AT&T wireless.

That puts other video providers at a disadvantage, according to Wilkins: “While there is no cash cost on a consolidated basis for AT&T to zero-rate its own affiliate’s mobile video service (since DirecTV’s ‘cost’ of Sponsored Data is equal to AT&T Mobility’s sponsored data ‘revenue’), an unaffiliated provider’s Sponsored Data payment to AT&T Mobility is a true cash cost,” he wrote in the Nov. 10 letter.

But AT&T’s Quinn said that assertion is “flatly incorrect.”

“Data Free TV is certainly not free to AT&T,” Quinn wrote. With increasing usage on its mobile network, he wrote, “AT&T will need to respond to those new usage demands by making capital-intensive investments, which will add to the billions AT&T has already spent to keep up with skyrocketing mobile video usage.”

According to Quinn, in the first four weeks after the launch of Data Free TV, nearly 3 million consumers who have both DirecTV and AT&T wireless took advantage of the feature, and the number of DirecTV Everywhere streams per month tripled versus one year earlier.

The FCC’s 2015 Open Internet Order does not prohibit sponsored-data services, and even acknowledges they may provide consumer benefits. But Wilkins said the Wireless Bureau’s concern was that AT&T’s pricing to unaffiliated providers “could render infeasible any third-party competitor’s attempt to compete with the $35 per month retail price that AT&T has announced for DirecTV Now.”

According to Quinn, that’s also off-base. AT&T makes its sponsored-data program available to all content providers on the same terms and conditions as it does for DirecTV, he maintained. The rates the telco offers to third parties are “as low as the market-based rates AT&T currently offers even to wireless resellers who commit to significant purchase volumes,” the AT&T exec wrote. In fact, Quinn claimed, AT&T has gone beyond the nondiscrimination requirements traditional law would require by allowing content providers to specify how much data they want to sponsor and charging them “the same low per-gigabyte rate regardless whether they are big or small or how much data they purchase.”

Meanwhile, the FCC’s leadership is set to change with Donald Trump moving into the White House next year.

On Monday, the president-elect designated two members of his transition team to focus on the FCC — economists Jeff Eisenach and Mark Jamison — both of whom are strongly opposed to the FCC’s network neutrality rules, adopted under the Obama administration. The two are considered to be candidates for chairman of the FCC to replace Obama appointee Tom Wheeler.

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